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dc.contributor.authorHess, Gregory D.en_US
dc.contributor.editorClaremont Institute for Economic Policy Studiesen_US
dc.date.accessioned2010-05-14T11:06:03Z-
dc.date.available2010-05-14T11:06:03Z-
dc.date.issued2002en_US
dc.identifier.urihttp://hdl.handle.net/10419/31406-
dc.description.abstractThis paper explores the role of marriage when markets are incomplete so that individuals cannot diversify their idiosyncratic labor income risk. Ceteris paribus, an individual would prefer to marry a hedge (i.e. a spouse whose income is negatively correlated with her own) as it raises her expected utility. The presence of love, however, complicates the picture. If love is very persistent, for example, and the resolution of uncertainty to agents' income is early, then those who in fact married hedges are the ones most likely to be caught short with too little love in order to save a marriage in the event of an adverse shock. Consequently, under these conditions individuals who are good hedges for one another are more likely to marry one another, although once married, they will be more likely to divorce. In contrast, if love is fleeting and the resolution of uncertainty to agents' income is predominantly later, then those who in fact marry hedges will in fact be less likely to subsequently divorce. Evidence is provided to distinguish which of these alternative scenarios is in support of these aspects of the decision to stay married. Additional hypotheses regarding the effect of differences in the expected means and volatilities of partners' incomes are also derived from the theory and tested.en_US
dc.language.isoengen_US
dc.publisherClaremont Inst. for Economic Policy Studies Claremont, Calif.en_US
dc.relation.ispartofseriesWorking paper series // Claremont Institute for Economic Policy Studies 2002-15en_US
dc.subject.jelJ12en_US
dc.subject.ddc330en_US
dc.subject.keywordConsumption Insuranceen_US
dc.subject.keywordMarriageen_US
dc.subject.stwEinkommenen_US
dc.subject.stwVerbraucherausgabenen_US
dc.subject.stwFamilienökonomiken_US
dc.subject.stwVerdienstausfallen_US
dc.subject.stwTheorieen_US
dc.subject.stwEheen_US
dc.titleMarriage and consumption insurance: what's love got to do with it?en_US
dc.typeWorking Paperen_US
dc.identifier.ppn366362089en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungen-
Appears in Collections:Claremont Colleges Working Papers in Economics, Department of Economics, Claremont McKenna College

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